Audit Notes: WSJ Win, Tully Calls a Crash, Sugar Shock

The Wall Street Journal has been doing solid work on the BP/Transocean oil spill, and today’s paper has another good example, reporting on the years of disasters and warnings on deep-sea drilling that went unheeded.

Without adequately planning for trouble, the oil business has focused on developing experimental equipment and techniques to drill in ever deeper waters, according to a Wall Street Journal examination of previous deepwater accidents. As drillers pushed the boundaries, regulators didn’t always mandate preparation for disaster recovery or perform independent monitoring.

The Journal’s Ben Casselman and Guy Chazan show an industry groping to use hope-it-works technology in unprecedented environments as oil has gotten harder to tap:

The use of untested techniques has raised alarm bells among some engineers. In a paper published in a trade journal last year, three industry engineers in Denmark noted that many deepwater projects are “dependent on prototype and novel technologies.” They said, “there is significant uncertainty related to the performance of these systems,” because they haven’t been tested in real-world settings.

He’s calling a market crash on the order of 1987, noting that stocks are “startlingly expensive.” They’re trading at around a 22 price-to-earnings ratio, well above the long-term average.

This focus on fundamentals is nice, but it’s unfortunate that Fortune doesn’t note the unfolding developments in Europe—ones that threaten the entire banking system and could provide the match for the tinder. That’s the big elephant in the room.

If you’re inclined to dismiss Tully as a naysayer, you’d do well to recall his repeated warnings on the housing bubble, which started way back in 2002.

It compares the amount of calories from sugar in twenty popular drinks to the amount found in popular desserts.

So, a RockStar energy drink has the same amount of sugar as six Krispy Kremes. A Tropicana Tropical Fruit Fury Twister has as much as two cans of ReddiWip. Arizona Kiwi Strawberry, which the blog notes is quasi-deceptively marketed as a fruit juice has as much as seven bowls of Froot Loops. And so on.

It’s eye-opening in the manner that mainstream journalism ought to more often be. Well done, and the pictures are great.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.

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